1 / 4

Absolute Advantage

Absolute Advantage. One person has an absolute advantage over another if he/she takes fewer hours to perform a task than the other person. Comparative Advantage.

rstaci
Download Presentation

Absolute Advantage

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Absolute Advantage One person has an absolute advantage over another if he/she takes fewer hours to perform a task than the other person.

  2. Comparative Advantage One person has a comparative advantage over another if his/her opportunity cost of performing a task is lower than the other person’s opportunity cost

  3. Comparative Advantage: The Basis for Exchange (Example)

  4. Comparative Advantage: The Basis for Exchange (Example) Jane has: • Absolute advantage in the production of pizzas, but not hamburgers, and has a comparative advantage in the production of pizzas. • Absolute advantage in the production of hamburgers, but not pizzas, and has a comparative advantage in the production of hamburgers. • Absolute advantage in the production of hamburgers and pizzas, as well as a comparative advantage in the production of hamburgers. • Absolute advantage in the production of hamburgers and pizzas, as well as a comparative advantage in the production of pizzas.

More Related